Import and export declined due to the weakness of the two major economies of the US and EU.

The WB’s Vietnam Macroeconomic Update Report for May 2023 said that the industrial production index increased slightly by 0.5% (year-on-year) in April, improved from a decrease of 2.0 % (over the same period) in March.

Production of textiles and garments, footwear and leather products, electronics, computers, mobile phones (including components), motor vehicles and transport equipment continued to decline in April as well as in April. the first month of the year compared with the same period in 2022, representing a weaker-than-expected decline in exports.

Domestic industrial production of consumer goods, including food and beverages as well as petroleum, continued to expand, partly reflecting the growth of domestic demand in April. Vietnam’s PMI index dropped to 46.7 in April 2023 from 47.7 in March, indicating that business conditions are not expected to improve in the near term.

Moderate retail sales growth on a low post-COVID-19 base in 2022 slows down. Retail sales recorded a growth rate of 11.5% (year-on-year) in April, on par with March 2023. Accounting for nearly 80% of total retail sales, merchandise sales fell from 11.3% (YoY) in March to 9.7% (YoY) in April.

Meanwhile, service sales continued to record a strong growth rate of 19.2% (year-on-year) in April (up 5.6% month-on-month), largely driven by by the expansion of tourism services (86% yoy), and accommodation and restaurant services (21.1% yoy). Vietnam welcomed about one million international visitors in April, an increase of 10% compared to March. The number of international visitors in the first 4 months of 2023 reached 3.7 million, but still 40% lower than before the epidemic (2019). .

Merchandise exports and imports fell by 17.1% (YoY) and 20.5% (YoY) respectively in April 2023. This reflects weakening demand in the economy. The US and EU - two markets where exports decreased by 22.1% and 14.1% respectively (over the same period) in the first 4 months of 2023.

Credit growth in April 2023 was estimated to decrease by 9.2% over the same period last year. The slowdown in credit despite the easing of monetary policy by the State Bank in March and ample market liquidity may reflect the weak absorptive capacity of the economy.

Committed FDI reached USD 3.4 billion in April 2023, up 46% compared to March. However, accumulated committed FDI capital in the first 4 months of 2023 only reached USD 8.8 billion, 17.9 lower than that of March. % over the same period in 2022. Disbursed FDI in April 2023 reached 1.5 billion USD, equivalent to a year earlier.

Meanwhile, accumulated disbursed FDI from the first four months of 2023 reached $5.8 billion. The slowdown in FDI commitments and disbursements in the first four months of 2023 may reflect investor caution due to global uncertainties.

One bright point of the economy is that the inflation rate has been gradually controlled. The consumer price index (CPI) fell from 3.4% in March to 2.8% in April 2023. Core inflation, excluding food, energy and price-controlled items (educational and medical services) was revised down from 4.9% in March to 4.6% in April. 2023.

According to the World Bank, Vietnam’s economy is facing external headwinds as weak external demand continues to put downward pressure on exports, leading to weakening industrial production. Although domestic consumption remained strong, credit growth slowed, reflecting weak credit demand.

Accordingly, the World Bank recommends, Vietnam needs to further tighten global financial conditions, requiring foreign exchange management to be flexible to adapt to external conditions. At the same time, in order to boost the economy in the short term, the speed of disbursement of public investment needs to be further accelerated. In terms of long-term economic development, Vietnam needs to ensure investment in human resources and green, resilient infrastructure.